Tax debt can become unmanageable. When that happens, it doesn't matter how talented someone is in their chosen profession. The overriding need is for a debt relief strategy.
If you don't have the money to pay your taxes, it might cross your mind to try avoiding the problem by not filing at all. Unfortunately, this reasoning is badly flawed.
The pop-culture press loves to report on the foibles of celebrities - including their problems with tax debt. Among those struggling with it recently are apparently the actor Nicholas Cage and former football hero O.J. Simpson. They are not alone, of course. Many people have tax debt.
Twice every year, the California Franchise Tax Board publishes a list of the 500 state residents who owe the greatest amount in income taxes. The state Board of Equalization has a parallel list, published every quarter, which tracks debts owed on sales and other taxes.
When summertime is in full swing in Southern California, taxes may be the furthest thing from many residents' minds. But for those who owe money to the Internal Revenue Service, taxes can become a year-round preoccupation. Since penalties and interest on tax debts can quickly swell the total amount owed, it is important to reduce and eliminate one's debts as quickly as possible.
In our last post, we discussed how some California taxpayers can benefit from a six-month extension to pay taxes this year. But some taxpayers have large debts to the IRS that may take them a significant amount of time to pay off. There are other options that can help these taxpayers, such as installment agreements and offers in compromise. Under the Fresh Start program, the IRS has also announced changes to these options with the goal of helping struggling taxpayers.